Global oil demand will rise by 2.2 million barrels per day (MMbpd) to reach a record high of 102.1 Mbpd in 2023, the International Energy Agency (IEA) said in its latest report on the oil market (OMR).
China will account for 70 percent of global gains due to increased use of petrochemicals, the IEA said. However, “China’s much-anticipated reopening has so far not extended beyond travel and services, with its economic recovery losing steam after rebounding earlier this year,” the agency said.
The IEA forecasts growth to slow to 1.1 Mbpd in 2024. “Global oil demand is under pressure from the challenging economic environment, notably due to the dramatic tightening of monetary policy in many developed and developing countries over the past twelve months,” IEA said.
The IEA expects global oil production to rise by 1.6 Mbpd to 101.5 Mbpd, as output from non-OPEC+ countries is expected to rise by 1.9 Mbpd. By 2024, the agency sees global oil supply rising by 1.2 Mbpd to a new record 102.8 Mbpd, with non-OPEC+ nations accounting for all of the increase.
According to the report, lower output from Saudi Arabia and major OPEC+ members since output cuts were first implemented last November has been offset by higher output from other producers US supplies rose by 610,000 bpd with natural gas liquids jumping to record highs while biofuels rose seasonally. However, the IEA predicts global supply could fall by more than 1.0 Mbpd this month as Saudi Arabia implements steeper cuts.
Observed global oil inventories rose by 19.4 million barrels in May to the highest level since September 2021, as a rise in China led to a build-up of 44.2 million barrels in countries not they are part of the Organization for Economic Co-operation and Development (OECD). OECD industry stocks rose by 170,000 bpd in May, while China posted its biggest monthly increase in crude stockpiles in a year at 1.1 Mbpd. According to the report, China’s recent buying spree included deeply discounted Russian and Iranian barrels.
In its April OMR, the IEA projected that global oil demand will increase by two million barrels per day in 2023 to “a record 101.9 million barrels per day.” Non-OECD countries, driven by a resurgent China, will account for 90 percent of growth, the April OMR noted.
In May, the IEA had raised forecasts for global oil demand as China reopened its economy after years of anti-Covid lockdown. The agency raised estimates for global demand by 500,000 barrels a day in the first quarter and by just under half for the year as a whole. As a result, global consumption would rise by 2.0 million barrels a day this year to an average of 101.9 million a day, it had forecast.
Meanwhile, according to a separate IEA report, investments in fossil fuel supply will increase by more than six percent to about $950 billion by 2023, based on an analysis of spending plans announced in large and medium sized oil and gas. , and coal companies.
However, the use of oil for transport fuels will decline after 2026, and oil demand growth will “slow to near a standstill in the coming years,” the IEA said.
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